Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?
A)1 acres
B)2 acres
C)3 acres
D)4 acres

Question

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park. 
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?
A)1 acres 
B)2 acres 
C)3 acres 
D)4 acres

Quizplus · Accepted Answer

To maximize total surplus, the park should be built up to the point where the marginal benefit equals the marginal cost. If the cost is $24 per acre, the park should be 3 acres, assuming the marginal benefit at 3 acres is equal to or greater than $24 and less than $24 at 4 acres.

Table 11-1 Consider the Town of Springfield with Only Three Residents, Sophia